You would likely face a bill for the unpaid Employer’s National Insurance contributions that HMRC would calculate that you owe – plus late penalty fees and interest. In addition, HMRC would expect you to employ all of your sub-contractors going forward: It is generally reckoned that the additional payroll burden for employing, as opposed to sub-contracting is an increase in payroll costs of between 28 -40%.  This is made up of, amongst other things:

  • Employers National insurance costs
  • Holiday pay
  • Additional admin costs for dealing with PAYE and Employment Rights Legislation
  • New pension contributions which will continue to rise
  • Employee benefits and leave entitlements.

This estimate does NOT include any additional cost incurred through the reduced ability to vary your workforce to match your workload, and the enhanced earnings expectations of the previously self-employed tradesmen.